To halt an international “race to the bottom,” the world needs a global minimum corporate tax rate, the US treasury secretary has urged.

“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity,” Janet Yellen told the Chicago Council on Global Affairs late Monday, adding that countries in the G20 – a group Turkey is part of – are working on such a proposal.

Citing US President Joe Biden’s proposals calling for raising the US minimum corporate tax rate and renewed international engagement, she said it is important to work with other countries to end the pressures of tax competition and corporate tax base erosion.

One of the consequences of an interconnected world has been a 30-year “race to the bottom” on corporate tax rates, she argued.

“Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids,” she said.

It is instead about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government, she explained.

Yellen said she will use this week’s IMF and World Bank spring meeting to advance discussions on climate change, press other countries to do their part to support a strong global economic recovery, strengthen tools to improve vaccine access and financing for the world’s poorest countries, and increase the focus on inequality.

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